Casinos: The Effects of Casinos - Crime

Officials must realize that legal gambling will attract an unsavory element that can jeopardize the safety and well-being of the city's residents and the many visitors who come to gamble.

—FBI Law Enforcement Bulletin, Federal Bureau of Investigation, January 2001

The Early Link between Casino Gambling and Organized Crime

Casino gambling in its earliest years was largely run by mobsters, gangsters, and Mafia families. After gambling was legalized in Nevada in 1931, the first casinos were small, rather plain establishments operated by families and small companies. Nevada law kept corporations out of the casino business by requiring that every shareholder obtain a gaming license.

Ironically, this law, which was designed to safeguard the integrity of the casinos, gave organized crime a huge advantage. The nation was in the midst of the Great Depression, and building a flashy casino/hotel was a very expensive undertaking that required a large amount of money. Few legitimate businessmen had the cash needed for such an enterprise, and banks were reluctant to loan money for what they saw as a poor investment. Organized crime groups had made fortunes selling bootleg liquor during Prohibition and were able to make the large capital investments needed to build and operate lavish casino/hotels that attracted visitors.

The marriage between casinos and organized crime in Nevada lasted for decades but was eventually ended by gaming officials and law enforcement. Today, there is no strong evidence of organized crime activity in the casino industry, but regulatory agencies keep a watchful eye on casinos to make sure mobsters and their associates do not gain a new foothold in the industry.

Other Unsavory Elements

Casinos incorporate a number of measures into their daily operations to minimize the potential for crime by patrons and employees. The casino floor is constantly monitored by a host of security guards and cameras. Observers watch dealers and patrons at the gaming tables and all money-counting areas. Some casinos use high-tech facial recognition programs to scan incoming patrons and quickly identify any known felons or other undesirables.

Still, criminals do enter casinos. In September 2000 security guards at Harrah's casino in Las Vegas tried to arrest a man on the casino floor. The officers had identified the man from a photo of a suspected thief, but when they tried to arrest him, a gun battle erupted and an innocent thirty-year-old woman from Hawaii was caught in the crossfire and killed. The woman's parents sued the casino, alleging that it had used insufficient security precautions to handle the matter. A jury denied the claim, ruling that the casino was not liable for the woman's death.

Crimes can also be committed by casino employees. Although the industry does not release data on crimes committed by casino employees, analysts estimate that employee crime accounts for millions of dollars in losses each year due to theft and embezzlement. Vice-type crimes also occur, particularly prostitution. In 2002 the Belterra Casino in Indiana was fined $2.26 million by the Indiana Gaming Commission for hiring prostitutes to entertain high-stakes gamblers at a casino-sponsored golf tournament in June 2001. The casino's license was also suspended for sixty-six hours.

In November 2000 a study called Effects of Casino Gambling on Crime and Quality of Life in New Casino Jurisdictions was published. The study was sponsored by the National Institute of Justice, the research and development branch of the U.S. Department of Justice. The study assessed the impact of casino gambling in eight areas that initiated casino gambling during the 1990s:

• Alton, Illinois
• Peoria, Illinois
• East Peoria, Illinois
• Sioux City, Iowa
• St. Joseph County, Missouri
• St. Louis, Missouri
• St. Louis County, Missouri
• Biloxi, Mississippi

Researchers compared official crime statistics from four years prior and four years subsequent to the initiation of casino gambling in these jurisdictions. The study concluded that results were mixed. Three of the jurisdictions—Peoria, Sioux City, and Biloxi—experienced a significant increase in certain crimes. However, crime in Alton and the city and county of St. Louis significantly decreased. Researchers decided that there was no single effect of casino initiation on crime.

The study also assessed the opinions of residents and community leaders in the eight areas on the effects of the casinos on crime and other quality-of-life issues. Attitudes about crime differed depending on who was asked. In general, residents associated casinos with increased crime, while community leaders felt that casinos improved the quality of life and economy. A majority (59%) of community leaders asked were in favor of the casinos, with 77% of leaders believing that the casinos had a positive effect on the local economy and 65% indicating that the casinos had a positive effect on the quality of life in the community. Those leaders in economic development positions were almost unanimous in their belief that casinos were a positive economic influence (95%) and that they improved the quality of life (86%). Fewer community leaders in positions concerned with providing social services (60%) felt that casinos enhanced the quality of life in their communities.

Tribal Casinos

A May 2002 article in Indian Country Today said that 225 criminal cases related to tribal gambling were referred to the Department of Justice between 1992 and 2000. Most of the cases involved theft from tribal casinos by patrons or employees. According to the FBI, theft and embezzlement are the most common crimes associated with casinos.

Biloxi, Mississippi

The article "When Casino Gambling Comes to Your Hometown" (FBI Law Enforcement Bulletin, January 2001) was written by the police chief of Biloxi and an FBI agent. Mississippi law requires that 20% of casino revenues turned over to local officials must be used to support public safety budgets. The Biloxi police department reported in the article that their department's budget more than tripled after casinos began operating. It used the money to build a new public safety building, hire more officers, and increase starting salaries.

The Biloxi police department also enacted personal-conduct rules for its employees to reduce gambling-related problems. It prohibits police officers from working at the casinos during off-duty hours. Officers in uniform are not even allowed to take meal breaks at the casinos. Officers who frequent the casinos are barred from conducting criminal investigations at them. Within a year of the casinos' opening, the number of pawnshops in Biloxi doubled. Over the next four years, the number doubled again. The police department increased monitoring to ensure that stolen property was not being pawned at these shops.

Crime statistics show that reported crimes in the Biloxi community increased after the first casino opened in 1992—mostly robberies, check and credit-card fraud, property crimes, domestic abuse, and alcohol-related violations. There were also more violations in traditional vice crimes, such as prostitution, pornography, loan-sharking, and extortion. However, the increase is attributed in part to a population increase, from 46,319 in 1990 to more than 53,400 in 2000. The city police department developed a task force with the FBI and other agencies to target organized crime groups involved in check and credit-card fraud, prostitution, money laundering, and pornography in and around the casinos.

TABLE 6.2

There were also minor problems associated with casinos, including increased traffic, nighttime construction noise, and flashing lights on business signs. However, the report describes the overall benefits of casinos as being "undeniable." The attraction and retention of more qualified police officers is noted as one of the chief benefits.

Missouri

According to the Missouri Gaming Commission Annual Report to the General Assembly: Fiscal Year 2003, commission agents filed more than 1,200 charges between July 1, 2002, and June 30, 2003, as shown in Table 6.2. The total includes charges for acts committed at the casinos as well as arrests made for criminal activities that did not occur on casino property.

Michigan

In July 2002 the Detroit News reported that at least five people had been arrested in Michigan during the previous year for robbing banks in order to get money to pay their large gambling debts or to make up gambling losses. The accused included an elementary school teacher, an electrical engineer, and even a dealer at the Greektown casino. Law enforcement officials reported that most of the people had no prior criminal records but turned to crime after charging the maximum allowed on their credit cards and exhausting other sources of credit (such as loans).

Counselors who work with compulsive gamblers say that those who turn to crime do not have the typical mind-set of criminals but delude themselves into believing that the money they take is a short-term loan that they will repay. The newspaper cites a report from the University of Nevada at Reno that found that seven cities across the country experienced a sharp increase in theft, abuse, and drug crimes following the introduction of casinos. Another study from a University of Illinois economist indicated that such crimes begin to increase approximately three to five years after casinos are introduced in a community. This time frame is thought to reflect the amount of time it takes compulsive gamblers to exhaust their financial resources and resort to criminal actions.